Market Report: NNPC delivers power supply in Nigeria
The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Alhaji Mele Kyari, said NNPC has agreed to $2.5 billion financing with a Chinese lender for pipelines in Nigeria. Alhaji Kyari said a successful negotiation of the deal will allow NNPC to deliver 3,600 megawatts of power and supply two billion standard cubic feet of gas to China. He added that the corporation had secured 15 percent owner financing from the Chinse firm, which is close to $430 million already, and that NNPC was expecting closure of 85 percent, amounting to about $2.5 billion.
Nigeria’s crude oil production is poised for an increased output of 35,000 barrels per day (bpd) as a protracted dispute on Oil Mining Lease (OML) 25 amongst Shell Petroleum Development Company (SPDC), Belema Oil and host communities came to an amicable end. Alhaji Kyari brokered a rapprochement offering the promise to open the way for the resumption of production activities on the field soon. Meanwhile, the Nigerian Petroleum Development Company (NPDC), a subsidiary of the NNPC has signed an $876 million oil and gas deal with Cold Water Petroleum Development Company (CPDC) for the development of OML 65. NPDC Managing Director, Mr. Mansur Sambo, said the deal has the potential to “explore, appraise and add reserves to base,” adding that it will help the federal government to earn more than $6 billion in taxes and royalties. It is also expected to open up production potentials of OML 65 from 9,000 to 40,000 bpd and add to the country’s reserve base.
VAALCO Energy has commenced its 2019/2020 drilling campaign and spud the Etame 9P appraisal wellbore at the Etame field offshore Gabon. Drilling of the Etame 9P appraisal wellbore is expected to take approximately four weeks, after which the company will commence drilling the Etame 9H development well, targeting the Gamba reservoir. The objective of the Etame 9P appraisal wellbore is to test the Dentale reservoirs beneath the Etame field. The Company estimates that there could be up to 4.6 million gross barrels of recoverable oil present in the Dentale reservoirs beneath the Etame field. If these resources are present in the Dentale, the Company will need to drill additional wells to exploit these reservoirs. As previously announced, VAALCO contracted the Vantage Drilling International Topaz jack-up drilling rig to execute the 2019/2020 drilling campaign, which will include two appraisal wellbores and up to three development well
On 19 September, oil prices climbed amid renewed concerns over risks to global supply in the wake of last weekend’s attack on Saudi Arabia’s oil infrastructure. The U.S. West Texas Intermediate crude futures rose 1.1 percent to trade at $58.73 per barrel at 9:35 AM ET (1:35 GMT), while Brent crude futures were up 1 percent at $64.67 a barrel. The Energy Information Administration weekly report for Wednesday 18 September showed a rise in crude inventories by 1.06 million barrels for the week ending September 13, against analysts’ expectations for a drop of 2.5 million barrels.
The market remains on edge over concerns that Saudi Arabia’s recovery from the attack will take longer than expected even though the kingdom has said it will honour its export commitments. The attacks knocked out over half of active Saudi crude production and severely limited the country’s spare capacity, a cushion for oil markets in an unplanned outage.
Earlier this week Saudi said production will be back to normal levels in 2-3 weeks, which means restoring output to about 10 million barrels per day (bpd). But traders and analysts are skeptical, while the lack of transparency about Saudi inventories adds to uncertainty about whether Riyadh can keep markets supplied without disruption. The International Energy Agency Executive Director Fatih Birol said on Wednesday that “There’s also no need to release emergency stockpiles because current supplies are adequate.” The group’s members held about 1.55 billion barrels of emergency crude stocks, more than enough to offset any disruption. The global oil market has enough resources to balance a large supply outage without requiring a strategic petroleum reserve release by developed nations. There are also worries hostilities may flare again in the Middle East as Saudi Arabia said Iran unquestionably sponsored the strikes and U.S. President Donald Trump plans to add “some very significant sanctions” on Iran.